Ad accuses Andy Barr of allowing payday lenders to take advantage of military families

The "cross-partisan" group With Honor, which formed to support military veterans running for Congress, has backed Democratic challenger and Marine veteran Amy McGrath.

McGrath is running against Republican incumbent Andy Barr for the U.S. House seat in central Kentucky’s 6th Congressional District.

The September ad lambastes Barr’s support of the payday lending business.

The ad says that Barr has accepted campaign donations from payday lending organizations and that he would let them take advantage of service members and their families.

"In Kentucky, we respect our troops, but Congressman Andy Barr would let shady payday lenders take advantage of them," the ad says. It goes on to say that he took "$36,550 from payday lenders, then let them stick our troops with outrageous fees. It’s what’s wrong with Congress."

It is no secret that payday lenders routinely sock consumers with excessively high charges and fees. But did Barr "let them" stick military families with outrageous fees, while also taking money from them for his campaign?

Yes and no.

First, some background

According to the Federal Deposit Insurance Corporation, "payday loans are small-dollar, short-term, unsecured loans that borrowers promise to repay out of their next paycheck or regular income payment." Payday loans often include very high interest rates or fees.

The Consumer Financial Protection Bureau, formed under President Barack Obama through the Dodd-Frank Act in 2010, launched the nation's first program for supervising "non-bank" financial services, which include payday loan providers, as well as debt collectors, mortgage companies and credit-score companies.

So what did Barr do, exactly?

At issue is Barr’s 2017 vote for the Financial CHOICE Act, which passed the House but failed in the Senate. Barr was one of seven original cosponsors of the bill.

The bill would make sweeping changes and repeal provisions of the Dodd-Frank Act, in part by weakening the power of the Consumer Financial Protection Bureau.

Under the plan, the agency would lose its oversight of payday lenders. There is a line in the legislation that says, "the agency may not exercise any rulemaking, enforcement, or other authority with respect to payday loans, vehicle title loans, or other similar loans.’’

With Honor spokeswoman Ellen Zeng also pointed to a June 2017 Military.com article that grappled with whether the bill would undo certain protections for active and retired service members and their families.

The bureau has played a major role in "providing restitution and help to troops taken advantage of by illegal financial practices," the article states.

One program, in the bureau's Office of Servicemember Affairs department, has fielded over 74,000 complaints about predatory financial practices from the military community since 2011, a 2017 CFPB report says, resulting in more than $130 million in relief to affected service members.

But then there’s the Military Lending Act

Barr’s campaign released a statement after the ad aired calling it misleading. There are existing laws that protect military families from payday lenders, the campaign said.

The 2006 Military Lending Act put a 36 percent cap on the amount of interest small-dollar lenders could charge on loans to military families.

When veterans groups raised concerns about the Financial CHOICE Act, Rep. Jeb Hensarling, R-Texas, who sponsored the bill and chairs the House Financial Services Committee, said it would not touch protections for veterans.

"The Financial Choice Act does not weaken the laws that specifically protect active-duty and retired members of our armed forces," he said in a June 2017 statement.

Zeng says the group stands by the ad, as the bill would have drained the Consumer Financial Protection Bureau, which she says plays a vital role in protecting military veterans and their families from predatory payday lenders.

Did Barr collect over $36,000 from payday lenders?

This part is pretty straight-forward. Yes, he did.

According to the Center for Responsive Politics, an authoritative database of campaign finance data, Barr has accepted $36,550 from PACs and individuals associated with the payday lending industry since his 2014 campaign. He has received $7,500 from payday lenders in 2018.

Our ruling

With Honor says Barr "would let shady payday lenders take advantage of our troops" and that he received $36,550 in campaign donations from payday lenders.

It is true that Bar has accepted $36,550 in donations from payday lenders. But the other part is more complicated.

Barr voted for legislation that would weaken the Consumer Financial Protection Bureau’s power over payday lending agencies, which could indirectly affect military families as the agency fields complaints from the community.

However, a 2006 law provides servicemembers protection, with a 36 percent cap on the interest small-dollar lenders could charge families.

So while the CFPB could have provided more protections to the military community than the 2006 law, the ad makes it appear as if Barr’s actions were connected to legislation specifically about veterans.

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